Subsidized Shortages

"Be like water, my friend."
--Bruce Lee

While examining California's water problems, Prof Williams makes an observation that I wish interventionists would grasp:

"Whenever there's a shortage of anything - whether it's water or seats at a baseball stadium - our first suspicion should be that the price is too low."

Forcing prices below market rates amounts to a subsidy. ECON 101 tells us that when behavior is subsidized, expect more of it. Subsidize it enough, and shortages occur.

That axiom holds for water, healthcare, education, welfare benefits, investment, borrowing, unemployment coverage...all behavior subsidized by the State.

When shortages occur, look first for force in the system that subsidizes overuse.